Sapura Energy Berhad and 22 of its wholly owned subsidiaries obtained new orders from the Court today, pursuant to sections 366 and 368 of the Companies Act 2016, to summon meetings of each of their respective scheme creditors and to restrain legal actions or proceedings from being commenced or continued against any of the Entities for a period of 3 months, commencing from 11 March 2023 .
The previous convening and restraining orders of the Court granted on 10 March 2022 (and extended on 8 June 2022) are set to expire on 10 March 2023.
The new Restraining Order will have the effect of restraining legal proceedings against the Scheme Companies, enabling them to engage with creditors in their debt restructuring efforts without being distracted by threat of legal proceedings.
The Court’s decision also included the effective appointment of existing Sapura Energy independent non-executive director Mr Lim Fu Yen as the majority creditors’ nominated director in the boards of Sapura Energy and the 22 subsidiaries, replacing Mr Cosimo Borrelli, whose term of appointment under the previous court orders expires on 10 March 2023.
Commenting on the new court orders, Group Chief Executive Officer Datuk Anuar Taib said, “We acknowledge the lengthy negotiations process and would like to thank our financiers and trade creditors for their cooperation during the past one year. This has been an uphill journey and we have now come to a crossroad. We need to offer a fair landing to our financiers, and at the same time ensure that our trade creditors, who include small and medium Malaysian enterprises, are not short-changed.”
Sapura Energy and its group of companies (“the Group”) made significant progress in its Reset Plan in the past twelve months, as it focused on completing the debt restructuring exercise and turn around its operations.
Despite limited working capital and macroeconomic challenges, the Group’s financial performance showed a marked improvement compared to the previous fiscal year, with all segments posting positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first three quarters of financial year 2023 (“FY2023”).
As of the third quarter of FY2023, the Group’s Order Book stood at RM6.8 billion, with contract wins for the year amounting to RM3.4 billion. Meanwhile, the Order Book of its jointly controlled entities stood at another RM5.7 billion. Sapura Energy completed a total of 45 projects for its clients in FY2023, and eleven of its rigs are currently under contract in Malaysia, Thailand, Brunei and West Africa.
“The Group retained its capabilities despite financial drawbacks, improving the prospects of the company. The beneficiaries of this turnaround include our vendors and the entire value chain in which we operate,” Datuk Anuar remarked.
Sapura Energy’s Proof of Debt exercise with its trade creditors is on track, with the adjudication process currently ongoing. The Scheme Companies received approximately RM1.5 billion in claims submitted by approximately 2,300 vendors.
In September 2022, the Corporate Debt Restructuring Committee (the “CDRC”) approved Sapura Energy’s application for CDRC’s assistance to mediate in its debt restructuring negotiations with financiers for its Multi-Currency Financing (“MCF”) Facilities. Sapura Energy presented a draft Proposed Restructuring Scheme to the financiers on 20 October 2022 and has since been making progress through CDRC mediated meetings with the financial institutions, to seek feedback on and to refine the terms of the PRS.
“The new Convening and Restraining Orders will allow us to complete discussions with our financiers,” Datuk Anuar explained. “Through CDRC’s mediation, we aim to reach an understanding and in-principle approval with financiers on the complex debt restructuring exercise involving RM10.3 billion in MCF Facilities.”
The CDRC Committee has extended the standstill period for Sapura Energy and its relevant subsidiaries up to 9 September 2023. In line with the CDRC’s Participants’ Code of Conduct, the MCF Financiers will be expected to observe the standstill and withhold all legal proceedings or recovery actions under the CDRC regime.